Based on data of sold apartments and single-family houses in Stockholm, Sweden, during the period of 2006 through 2013, we find that forced sales of apartments and single-family houses cause a substantial price discount. The results of a hedonic spatial Durbin model show a negative impact on transaction price of 20.1% for foreclosed apartments and 24.6% for foreclosed single-family houses. Furthermore, the price discount increases when the number of attempted auctions is limited, which is the case for forced apartment sales owing to a lost membership in a housing association (forfeited). In those cases, the discount is as high as 29.1%.

Using data from Stockholm, Sweden, I examine whether foreclosed properties are sold at a discount. This institutional setting differs from the United States and studies of real estate owned properties. The findings show that properties experience an eight times higher turnover subsequent to a foreclosure Compared with the general market, indicating that professional buyers are taking advantage of a discount. That a substantial fraction of buyers are found to have bought more than one foreclosed property provides further support towards such a pattern. Holding period returns prior and subsequent to a foreclosure also supports a price discount.

Using a dataset with individual appraisals of foreclosed apartments sold through auction in Stockholm, Sweden, the issue of selection bias and a potential overestimation of a foreclosure related discount on price is addressed. A mean discount of 7.9% with a corresponding median value of 9.5% is shown. A hedonic model is also applied. It is found that about half of the impact on price caused by a forced sale is attributable to the search process on the real estate market. These results contrasts from earlier research having explained a negative impact on price to seller motivational factors. These results provide insight towards the dynamics of a negative impact on price caused by a forced sale, and has the potential to allow stakeholders to model a potential discount in greater detail for individual foreclosed properties, and contribute to management of credit risk. 

The paradigm shift of focus from rental apartments to owner occupied units on the Swedish property market has led to a substantial number of rental apartments being converted to cooperative apartments. Such conversions are typically done at prices below market value. This provides a setting with strong financial incentives for tenants involved in such a conversion to take advantage of their informational advantage regarding the financial management of a cooperative, compared to less informed neighbors and buyers on the general market. This setting also provides a reliable way of estimating the persistence and effects of such an informational asymmetry through nearly 200,000 apartment transactions in Stockholm, Sweden, during the period of 2005 through mid-2014. We find evidence supporting that insiders take advantage of an informational asymmetry; as newly formed cooperatives set monthly fees artificially low in order to increase the probability of a conversion as well as apartment values. However, market participants seem to discount this informational asymmetry as recently converted apartments sell at lower prices.